ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The opportunity cost of going a movie is the net benefit associated with the next best alternative forsaken by choosing to go for the movie. In the given scenario, the opportunity cost of going to movie is the net benefit which could be gained by investing the same time and money somewhere else.

Detailed explanation-2: -A student spends three hours and $20 at the movies the night before an exam. The opportunity cost is time spent studying and that money to spend on something else. A farmer chooses to plant wheat; the opportunity cost is planting a different crop, or an alternate use of the resources (land and farm equipment).

Detailed explanation-3: -Buying 1, 000 shares of company A at $10 a share, for instance, represents a sunk cost of $10, 000. This is the amount of money paid out to invest, and getting that money back requires liquidating stock. The opportunity cost instead asks where that $10, 000 could have been put to better use.

Detailed explanation-4: -When consumers purchase one good or service, they are giving up the chance to purchase another. The best single alternative not chosen is their opportunity cost. Since a consumer choice always involves alternatives, every consumer choice has an opportunity cost.